New Group, With Conservative Credentials, Plans Push for a Carbon Tax

The New York Times
June 19, 2018
By John Schwartz

Proponents of a market-oriented plan to fight climate change by taxing greenhouse gas emissions and giving the revenue to American taxpayers are starting a campaign to run advertisements as early as this fall and introduce legislation in Congress as early as next year.

The plan’s supporters have formed a group called Americans for Carbon Dividends that will lobby for the proposal. The group plans its first event on Wednesday and includes a number of well-known members, including Trent Lott, the former Senate Republican leader from Mississippi, and Janet L. Yellen, who led the Federal Reserve under President Barack Obama.

The initiative has already won endorsements from some environmental groups, like Conservation International; fossil fuel giants like Exxon Mobil, Shell and BP; and major companies in renewable and nuclear energy and consumer goods.

“It’s something that may command bipartisan consensus,” Ms. Yellen said in an interview, calling the proposal “a very exciting prospect.” Taxing carbon dioxide emissions to reduce energy use, she added, is “absolutely standard textbook economics.”

The proposal would set an initial tax of $40 per ton of carbon dioxide produced and would increase the price over time. That would raise the cost of a gallon of gas by approximately 38 cents, the group says, with similar effects on household heating and other energy use. That could, in turn, encourage people and businesses to become more energy-efficient and curb their use of fossil fuels.

To offset the higher prices, the tax revenue would be returned to consumers as a “carbon dividend.” The group estimates that the dividend would give a family of four about $2,000 in the first year.

The group says the plan could reduce United States emissions even further than the Obama administration pledged under the Paris climate accord.

But the leaders of the group are not holding their breath. The notion that the current fractious Congress could pass a bill based on the proposal is not within their fondest expectations. Instead, their strategy is to build public support for the plan while working toward a legislative proposal that could be introduced after the midterm elections, when a new Congress might be more friendly to environmental legislation.

“It’s not going to happen overnight — we’ve been debating this for 30 years,” said Mr. Lott, mentioning past efforts like the failure to pass complicated cap-and-trade legislation in 2009 and the lack of support for the Kyoto Protocol climate agreement. But now, he said, “I really do think the tide is turning.”

Mr. Lott pointed to bipartisan support in the current Congress for renewing a tax break for technologies to capture and store carbon dioxide, and cited results of a poll commissioned by the group that showed wide support for the principles of taxing carbon and returning the money to taxpayers. A 2016 study by the Yale Program on Climate Change Communication also found that most Americans would back such a program.

Giving the money back to consumers could sweeten the deal for taxpayers, but other parts of the plan are intended to foster support from other quarters. Climate change regulations on businesses would be rolled back — although the Trump administration has already moved to rescind a number of existing rules. Fossil fuel companies, meanwhile, would be protected from lawsuits intended to hold them accountable for the damage caused by climate change.

This element of the deal has angered some climate change activists. “We categorically oppose any deal that shoves trillions in costs down the throats of innocent taxpayers and lets the companies skip away to profit and deceive another day,” said Lee Wasserman, director of the Rockefeller Family Fund, which has encouraged investigations and lawsuits against the fossil fuel industry.

Still, the group has drawn bipartisan support. Mr. Lott is a co-chairman, with John B. Breaux, a former Democratic senator from Louisiana. Senior advisers to the group include Mark McKinnon, who was an aide to President George W. Bush, and Joe Lockhart, who worked with President Bill Clinton. Ben S. Bernanke, Ms. Yellen’s predecessor, is another founding member.

The plan was first put forth in February 2017 by a related group called the Climate Leadership Council, with the backing of a team of Republican lions like the former secretaries of state James A. Baker III and George P. Shultz.

Despite the group’s Republican backing, other powerful conservatives like the billionaire brothers Charles G. and David H. Koch continue to support politicians who deny the science of climate change. Republican candidates who talk about fighting climate change risk being overwhelmed by heavily funded opponents in primaries.

If the new group’s fund-raising is successful, it could counter the forces that have turned primaries into climate abattoirs, a prospect that could lead to a rift in the Republican Party. One of the political advisers, Mr. McKinnon, said, “I sure hope so.”

“I think a lot of Republicans are looking for a rift on this issue,” said Mr. McKinnon, who is a Republican. “You don’t want to give money back to consumers and make the environment cleaner? I’ll have that debate.”